Announcements are expected soon regarding a merger involving Dubai Properties, Sama Dubai and leisure developer Tatweer, all part of Dubai Holding, which is owned by Sheikh Mohammed bin Rashid al Maktoum, Dubai's ruler and Emaar Properties, the Middle East's biggest property developer.
Dubai Holding and Emaar Properties confirmed they have been involved in talks. A joint statement said the move would consolidate Emaar, which is building the world's tallest tower in Dubai, with the smaller developers.
'Emaar and Dubai Holding with the assistance of their financial advisers, the Royal Bank of Scotland PLC and Merrill Lynch International respectively, are in the process of finalizing a thorough assessment of the merits of this proposed consolidation,' the statement said.
The assessment includes a valuation of the various entities as well as an examination of the potential transaction structures. 'Consolidating these three companies with Emaar is a natural progression in the evolution of the Dubai real estate landscape, providing benefits to all stakeholders,' said Mohammed Al Gergawi, chairman of Dubai Holding.
Such a move has long been anticipated since the global property slump hit Dubai harder than had been anticipated. Many experts pointed out that some companies would inevitably have to be taken over or cease to exist.
'Given the sharp drop in project pipeline it is the right thing to do. It is a much needed catalyst,' said Saud Masud, real estate and construction analyst for the Middle East and North Africa at UBS.
Earlier this week, Peter Riddoch, chief executive of Damac Properties, the Emirate's largest private developer, told the Reuters Global Real Estate Summit in London that he believed prospects for consolidation in Dubai remained high as the government looked to support its property firms.
Tatweer said earlier this month the bankruptcy of its partner Six Flags, one of the largest theme park operators, would not delay a multi-billion dirham park project in Dubai.
Tatweer is building at lease seven theme parks in the Gulf Arab emirate.
Dubai Holding had already merged the back-office operations at Dubai Properties, Sama Dubai and Mizin to cut costs.
